Worried
about the future of Social Security? You're far from alone. The Social
Security Administration itself has said that unless something is done to
reform the system, it will burn through its funds within the next few
decades. Less talked about, perhaps, is the concern about the present:
the program is having a hard time paying its bills. In 2010, the Social
Security Administration collected less revenue in taxes than it needed
to cover its benefit payments — the first time expenditures have
exceeded income since 1983. As a result, the program had to tap its $2.5
trillion trust fund, sooner than some had expected. The same is
expected to happen this year. "The depth of the recession has slowed
down revenues to the system," say Eugene Steuerle, an economist with the
Urban Institute, a non-partisan think tank in Washington, D.C.

A
Social Security spokeswoman points out that interest income from the
Treasury bonds held in the trust fund will allow it to keep growing
until 2022 — even if the agency has to siphon off some money to offset
any shortages in tax revenue -- and won't be exhausted until 2036, when
the first Gen Xers begin retiring. But that's already one year earlier
than previous projections. After that, the agency says tax income under
the current system will only cover about 75% of benefit payments through
2085.

2. "The more you make, the less you get back."

It's
common to think of Social Security as an individual account of sorts —
what you pay in, you get back, more or less. That's far from accurate.
By design, the Social Security Administration says, the system is tilted
in favor of lower-income workers who have fewer resources to save for
retirement. In practice, that means that the more money you make, the
less you get back, at least as a percentage of your salary. For example,
a single, 66-year-old man who earned $50,000 per year on average and
retired in 2011 would get an annual benefit payment of about $22,800, or
about 45% of his annual salary. If he had earned $150,000 per year, he
would get annual benefits of about $30,670 — just 20% of his annual
salary. "People act like the percentage of benefits of your salary you
get is the same for everyone and it really isn't," says Jo Anne
Barnhart, former Social Security Commissioner.

That's particularly
true for the highest earners. Benefits are calculated on a maximum
average salary of $106,800, which means anyone who made that much or
more — whether by a few dollars or by a few hundred thousand dollars —
gets the same annual Social Security payment. To be fair, earnings over
that threshold aren't taxed, either, and the agency spokeswoman says
benefits are meant as supplemental retirement income, not full freight.

3. "This used to be a much better deal."

Today's
workers — boomers, Gens X and Y — like to carp about Social Security,
but it's not all sour grapes or skepticism about paying into a system
with an uncertain future. Employees today pay more in Social Security
taxes than previous generations did. They're also likely to get smaller
benefits when it's their turn to retire.

Over the years, as the
Social Security Administration has come to grips with the cost of its
benefit program — and the ranks of eligible beneficiaries has swollen —
taxes to fund the program have gone up and up, a trend that experts say
is likely to continue over the coming years. As a result, workers now
pay 6.2% in payroll taxes (reduced to 4.2% in 2011) — nearly double the
3.6% tax rate workers paid in 1965. Over the same time period, the
maximum earnings eligible for taxation have also increased from $4,800
(equivalent to about $34,500 in 2011 dollars) to $106,800.

For
example, a single man who retired in 1980 at age 65 after earning an
average wage of $43,500 would have paid about $96,000 in Social Security
taxes, and probably received $203,000 in lifetime benefits, according
to a study by the Urban Institute, a non-partisan policy think tank in
Washington D.C. By contrast, a single man making the same average wage
today and retiring in 2030 will likely pay $398,000 in lifetime taxes
but receive just $336,000 in lifetime benefits — about 16% less than he
paid in. "People who were first in the system got a great rate of
return," says Alan Gustman, chair of the economics department at
Dartmouth College. "It's the younger generation that is going to be in
the most difficult position."

The agency spokeswoman says the
imbalance is partly due to the fact that the earliest beneficiaries only
paid taxes in the later stages of their careers.

4. "Want a bigger check? Go back to work."

Most
people within ten years of age 62 have already started doing the Social
Security math problem: How much do I get if I wait one year to take
payments? How much if I wait two years? To get the biggest bump in
benefits, workers have to delay their benefits beyond full retirement
age — around 66 for people born before 1957, closer to 67 for people
born after. (To find your exact date, see Social Security Online.)
For every additional year you wait, you'll get an 8% increase in
payments until you hit age 70. Someone who earned, on average, $50,000
per year over their working life would get $1,900 per month at 66, but
$2,505 if he waited until age 70 — a 32% boost. "You'll get a bigger
benefit amount for the rest of your life," says Dennis Marvin, a
financial planner in Cleveland.

If you've already started
collecting benefits and you're under full retirement age, it's not too
late to get a raise. One strategy: Go back to work. If you earn more
than $14,160, the Social Security Administration will dock $1 in
benefits for every $2 you earn. But once you reach full retirement age,
your benefits will be recalculated to account for the money you didn't
get while working. So, for example, someone who took their benefits at
62 — at a 25% reduction compared to full benefits — but went back to
work from ages 63 to 66 and earned enough to zero out his entire Social
Security check could end up collecting close to full benefits at age 66.

5. "Good luck qualifying for disability."

More
than 8 million people receive Social Security Disability Insurance,
which is awarded to people who are unable to work because of a long-term
physical or mental disability. But qualifying is no easy task, says
John Roberts, manager of Myler Disability, an advocacy group. Only 30%
who applied in 2009 were awarded benefits, down from 44% in 1999,
according to agency data.

Some of that change can be attributed to
more people applying for benefits — 2.8 million in 2009 compared to 1.5
million a decade earlier. That's common when the economy is tough, says
Gustman: The number of applications rises, along with an increase in
claims that fall short of the agency's standards. Even for people with
true and serious disabilities, it can be difficult to qualify. The
process can take years and often requires legal help. Most people have
to wait for a hearing, says Roberts: "Best case, it is 18 months before
you get approved." In some cases, the battle goes to federal court.

To
improve your chances, Roberts recommends applying for benefits as soon
as you become disabled. Waiting too long could leave you in a situation
where you haven't worked long enough to qualify for disability benefits.
You must generally have worked at least three to ten years before you
became disabled, depending on your age. The spokeswoman for the Social
Security Administration says it does not pay benefits for partial or
short-term disability and taxpayers must be able to show that they
cannot do work they did before or adjust to other work because of their
medical condition.

6. "You can be unemployed and retired."

A
growing number of people in their 60s are collecting unemployment and
Social Security benefits at the same time. Since 2002, seventeen states
have changed the rules to allow people to qualify for more unemployment
benefits while they receive Social Security, according to the National
Employment Law Project, which has advocated on behalf of allowing
seniors to claim both. It's perfectly legal; you just have to report the
income to both agencies.

There is no clear data on how many
people are drawing both. About 10% percent of people who collected
unemployment benefits in 2010 were 60 or older, according to the
Department of Labor; the minimum age to collect Social Security
retirement benefits is age 62. For those who qualify, the option has
obvious appeal for older Americans struggling to find work in today's
weak job market. "We are generally talking about older workers who lose
their jobs involuntarily, who are trying to survive," says George
Wentworth, an attorney with the National Employment Law Project.

Receiving unemployment benefits doesn't affect your Social Security
payments, but the reverse is not always true: In some states, collecting
Social Security can reduce your unemployment checks. In Illinois,
Louisiana, South Dakota, Utah and Colorado, your unemployment benefits
can be reduced by half of your monthly Social Security benefit.